What is Housing Levy and What You Need to Know About it

Affordable housing is essential for every Kenyan citizen today. The Kenyan constitution dictates that the state should take legislative measures to ensure adequate and available housing for every Kenyan. The plan is to build up to 250,000 low-cost homes per year under the current president regime. Employees will use the contributions to fund the purchase of homes. 


Employers and employees are required to each make a contribution of 1.5% of the employee’s monthly basic salary to the Fund provided that the combined contribution does not exceed Kshs. 5,000/ per month. Persons who are not in formal employment or who are non-citizens may contribute a minimum of Kshs. 200 per month. Gazetted Housing Regulations (the “Regulations”) allow for contributions above the statutory minimum. NHC is required to specify on a yearly basis the return applicable on members’ contributions.

The Benefit of the Housing Levy

The government set a target of building 2 million affordable units by 2030. The government expects the levy to generate 57 billion yearly for the construction of these units.

Employees qualifying for affordable housing can finance home purchases using their contributions. In addition, even if the employee does not qualify for affordable housing, they can benefit upon expiry of seven years in ways such as:

  • Transferring contributions to retirement benefits or pension schemes.
  • Transferring contributions to a spouse or dependent children.
  • Transferring the contributions to any person eligible for affordable housing.
  • Receiving their contributions in cash as part of the taxable income, subject to a tax deduction. 
  • Obtaining financing for the purchase of a home under the affordable housing scheme, at an interest rate of up to 7%per annum on a reducing balance basis (or other rate gazetted by NHC from time to time). The financing is available on the application and satisfaction of the set criteria.


‍In conclusion, the government requires employers to deduct and remit the levy with other payroll statutory deductions. The regulations indicate that failure to adhere to this directive will attract various penalties for non-compliance. Similarly, those who will not get a house from this plan will enjoy contributions in other ways.

Posted in
Denounce with righteous indignation and dislike men who are beguiled and demoralized by the charms pleasure moment so blinded desire that they cannot foresee the pain and trouble.